tv Worlds Apart RT January 4, 2018 4:30am-5:00am EST
korean leader trade barbs over the size and power of their nuclear arsenals. and that was it for me my colleague andy farmer will be here next hour bringing you the latest top stories up next though it is a look at what is behind a big point spectacular rise in value on cross talks to. a low end welcome to cross talk where all things are considered deidra labelle bitcoin for some it's the perfect marriage of technology and finance for others it's a get rich scheme though no one can deny its market value was soaring and becoming
an attractive alternative to the current global banking system is bitcoin revolutionizing the world. across talking bitcoin i'm joined by my guest mitch firesign in new york he is a fund manager and author of the book planet ponzi in atlantic we have jeffrey tucker he is director of content for the foundation for economic education and in cambridge we crossed garrick heilman he is a research fellow at the university of cambridge right gentlemen cross-talk rules in effect that means he can jump in anytime you want i always appreciated gary let me go to you first in cambridge explain what is going on with bitcoin i mean i'm of the age and i used to work in finance ike i can remember the dot com bubble and then it's melt down here and not being very well versed in bitcoin what is going
on here is this just speculation or is this the new shiny radiant future go ahead in cambridge. i think i think a little bit of both to be honest and certainly we've seen you know some aspects of this story before as you mentioned you know after the dot com bubble exploded in two thousand two thousand and one there were a number of winners that emerged from that area and a number of new companies that were born after that have done quite well you know big has already been declared dead several times in two thousand and eleven wired wrote in article saying the rise and fall of a coin we saw the crash in two thousand and fourteen yet it keeps coming back so wouldn't surprise me if we have another crash maybe a few more in front of us but it does seem that there is something important happening here with regard to the future of finance the future of money yeah well at least a small number of people have become at least i guess technically in the clouds somewhere fabulously rich it's really an amazing story jeffrey i mean gary called this i think in an article a minor miracle is that it would you use the word miracle here let me go to jeffrey
in atlantic. i read that article and i of i appreciate that term actually it kind of is nobody ever thought anything like this was possible before two thousand and eight before the white paper of two of october two thousand and eight we didn't really have the means to do with the block chambers today just for background to block changes the real underlying technology of decline in the real reason for its value going to just an expression of that logical value. allows us to do something we've always wanted to do with something actual but never had the ability to do it thanks to these distributed networks and cryptography we can do it you know mitigates against jeffrey kind of put it in the same cli for me because you know i was in finance for a number of years and there's always you know what's it backed up by you know you know what are the assets you know you know you always look at that and then but what jeffrey just said there kind of explains it it's the technology is the safety that's what backing it up here do you buy that because you know you can say this is
a scheme it's a get rich but i mean there's something to it and people are making money here and you have to makes everyone interested to get involved in it if you have the means go go ahead mitch how do you explain it all. well i mean we need perspective i think bitcoin has come about in a time where the central banks reckless central banks around the world has distorted every market and too much credit too much debt and too much leverage have created instability in the financial markets so we need to add perspective so we need to look at risk versus reward with bitcoin and in the bitcoin trade so bitcoin has gigantic volatility you're seeing thirty percent moves either way in a day or forty percent moves for so it's not for the faint of heart so you know my perspective from an investor and being in the banking community internationally for thirty eight years you look at the iconic figures like jamie diamond who said it's a ponzi scheme and it's going to zero he's totally wrong but the establishment
banks and the way that the fractional banking system works people want to escape from that people want to escape from the establishment but what we've got going on here just to be clear is we've got inflation in every asset class stocks are trading at stratospheric valuations apple has a market cap approaching eclipsing one trillion dollars facebook at six hundred billion so if you look yesterday a couple sorry if you look. recently you saw a pullback in the nasdaq the fang stocks facebook apple and all the technology issues they lost sixty eight billion dollars in market cap in a day where the market cap of bitcoin is what around one hundred sixty billion dollars so on a relative basis it's a much smaller move and it's a very emerging market so i think we've got to look at where we are in this in alternative asset class i mean you're looking at art a leonardo da vinci painting trade that run one hundred fifty million dollars so i
mean we need to put it into the proper historical perspective now stocks are way overvalued so are bonds and so is property so people are looking to get out of the dollar system and i happen to agree you need to diversify but i think you should also get. some precious metals gold and silver which have been currencies for six hours and years i mean dollar is backed by fundamentally not nothing ok good let me go back to cambridge carol i mean there's a lot of people are saying that. large investors are getting involved in trysted in bitcoin is that distorting the price because they have the deep pockets that this price level to get into the market is there something behind out there that you know that because i having been in finance i mean this is this is speculation ok i mean that people are not buying on facts or buying on speculation right now go ahead in cambridge. right i think certainly the hedge funds the big whales that are coming in the billion the billionaires we read about you know
are certainly influencing the price direction but i think there's still a lot of money on the sidelines i was at a hedge fund conference recently and less than twenty percent of of the funds in the room there are some pretty big funds in the room have taken a step into this space and i think the ones that have a lot of them have done so as individuals rather than putting their funds in because you know it's still very difficult to short yet there's major counterparty risk a lot of the exchanges cryptocurrency exchanges will do things like reveal their financials or audited financials to fund so things that you know hedge funds are used to having in typical markets they trade in are not in place yet here but they're coming if see i mean nasdaq do come into the market with futures platforms you know if things like e.t.s. and you know other things roll out bring more regulation to the space then i think you will see even more hedge funds come in the price you know could go either way frankly i think the investment playing field has been a bit lopsided in favor of the bowls and that could level and
a lot of the hedge fund guys are passionate about crypto and frankly they would probably i think from a psychological perspective prefer to make money if crashes on the way down the well that would certainly help them rationalize their lateness to the bartunek you know market you know jeffrey it's very interesting is that it's i think one of the interesting phenomena about big calling is that it's a lock of regulation and going back what mitch had to say here and we have to remember this phenomenon came into being after the financial crash crisis of two thousand and eight which the banks were responsible for and so it's an element of that here is because that the freedom of here but the go ahead jump in go ahead . yeah no this certainly is the i think of the success of big and part attributable to the fact that it has not been managed from the center is not been. late and that allows a lot of innovation and for people to try out things you know you want to talk about market caps you can talk about one hundred fifty billion for
a big client but really you have to look at the whole class of crypto assets right now and you're looking at last i checked about three hundred fifty billion once you include all the various tokenize block chan's that are out there all the various the ferry i'm applications the various all coins and we're just beginning to see things we're going to see things coming up within the next year like these lightning networks that are going to be used for small transactions that are going to fix the prevailing problems that exist in decline which is that the networks are vastly clogged right now and it's very expensive to send and receive. it's going so hard so fast as almost become unusable just by itself for regular small transactions that. are looking for things like oh yeah that's the reason why i never really got into it because it's not easy to move around lease i'm not adept at doing those kind of things or you know mitch another the other people are saying that this whole thing with
a big point it's really just an investment it's not really. a mechanism to buy and sell it is to park your money somewhere and leave it there because you don't trust the banks i mean it for it to be really universal you have to be able to be able to use your wallet as they call it you know and buy things and sell things it's not that easy to do it's not widely accepted you know many more innovative people do say they accept the go ahead midge. it's part of you know it's part of a diversification strategy where you'd have some big going to just sit on it not worry about what your basis was and whatever losses are you're going to eat the losses and if you get a profit out of it fine but you know it when you have that much volatility you know i disagree that the big hedge funds will get involved in this when you have a thirty percent volatility swing each direction so from peak to trough and back up again down and up again i mean no investor wants to tolerate that kind of volatility and how can you manage that kind of volatility becomes very difficult so
are the hedge funds and the banks going to jump in head first up at these levels probably not if we get a more bit a bit more stability into these markets you'll see more investment but also from that risk reward perspective you've also got to keep in mind that this is a non regulated market that's the attractiveness from people but governments have overreach like we're seeing in the media right now the deep state runs america they're trying to rewrite history here with these statue wars and that's always a dangerous time so if too many people get on the bitcoin train and get on the crypto train the government could come in one day and say it's illegal in this country we're cracking down on everybody because right now when you open up an account they they demand the k y c know your customer information and they they will when it becomes bigger they will try to regulate it and they will try to control it it's difficult for the government to let anything come out of it's you know come out of its grasp the federal reserve prints willy nilly trillions and trillions of dollars since we went off the gold standard backed by nothing now that
this is a ponzi scheme the government that's what my book is about the government debt globally is a ponzi scheme the governments can never repay this debt and we're about to hit a wall so should people invest in alternative asset classes absolutely is a leonardo da vinci painting we're painting worth half a billion dollars is an apartment in midtown midtown manhattan worth six hundred million dollars i would argue no it's not and i would agree we should prices from when i went to university have gone up to. thousand percent yeah where real wages since the one nine hundred eighty s. are flat so how does that work out when i got out of school i could've bought a better match and they let me let me jump in here and fifty thousand gentlemen oh i have to go to a break and after that short break we'll continue our discussion on bitcoin staying with our. max kaiser financial survival guide liquid those that you can burn using fast quite easily. to keep in mind though as
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we're discussing bitcoin. here let me go back to you in cambridge while it is a fascinating concept these crypto currencies there is the concern of accountability you know illegal drugs arms and other kinds of illegal activity they stay under the radar of the authorities i mean i think that's a kind of a down. inside also you know when people talk about it is being a newfie currency one day i mean you know people are buying big ticket items because they are avoiding taxation and things like that so i mean it kind of cuts both ways here i guess really the most important question will be if this kind of crypto currencies are successful what is the temptation of governments to step in to regulate it and would regulation kill it go ahead. right now it's been very interesting to watch the migration of regulatory interest across this space mean
first we had law enforcement with the rise of the silk road in the online dark web so use of big coin take an interest in the sector more recently securities regulators and with the up swing in prices i'm sure tax authorities are kind of next in line to to start getting involved with regards to law enforcement question you know it's a it's a double edged sword for law enforcement because on the one hand you know you know these these currencies do enable privacy on dark web transactions but on the other hand law enforcement when they catch a criminal who's been using big quiet and they get a hold of their wallet software they get effectively their books and they may have a good chance of recovering some of the funds and that's not something you get with the cash criminal where there isn't record keeping so you can use the block chain to prosecute cases and that has been done and law enforcement i think at least in some jurisdictions is steadily becoming more open to seeing crime committed with
with watching technology does give them a to advantage over cash crime ok it's a very transparent technology that's sort of amazing plus for jeffrey earlier this week there was a san francisco judge putting pressure on a company that trades in these commodities in these currencies here they want to see their books they want to see names they want to see transactions here what kind of threat is that to bit going on in big calling evolve with this kind of supervision and regulation from the outside because my sense is or maybe you can correct me over on the people that started this whole thing don't like the state they don't like authority that they really want to be on their own here we're going to see it encroachment on this on these kinds of a currencies and you know alternative financial mechanisms go ahead you know the regulation of the exchanges began in the spring of two thousand and thirteen so far as i'm concerned it was a disaster. we would have been much further along without these regulations this is
the main way the government can control because it's not actually controlling because what they're doing is controlling the traffic between national monies and crypto assets coming and going they can control that and the u.s. has some of the worst regulations in the world. crypto assets right now on these exchanges well you know why is that you know jeffrey why is that markets are global why is that what a lot why is that situation exists in the u.s. well because the regulators are trying to force a modern digital technology into an analog old world style regulatory framework and it's not working and all this doing is driving the innovation out of this country and other places you know you can buy big climb much easier and a place like israel then you can united states or in brazil you know i've i've i've been to exchanges all over the world most of them are very free and easy and there's a lot of entrepreneurship there in the u.s.
it's all about command and control it's a huge mistake for american regulators to be taking this direction because they're just going to drive the innovation and the capital outside the borders but he went and crypto assets in general are global technology if they don't care about the nation state ok mitch you know address that issue there because i mean the all mighty dollar it's a threat to a bit calling it all these other things are a threat to the the global domination of the dollar and it's obviously something the u.s. doesn't want to have happen i mean you're. right we're talking about u.s. dollar germany and you know my view is us the days of u.s. dollar germany are our very limited look before the united states became the reserve currency i think in one nine hundred thirteen when they created the federal reserve which is a disaster that should be shuttered. we had the british sterling was the reserve currency of the world for three hundred years now was the united states responsible
with the petro dollar and going off the gold standard in the nixon era i would argue no i would argue that this is caused market distortion i would argue that the central bank policies in the last ten years have been more destructive than the good that they've provided because i don't see that we've created a growth for the trillions of dollars in debt that we've created now the as we saw in the last administration in washington big government is in right now so are our government is gargantuan and they want overreach with everything in every part of people's lives in america and to do that if you get an iron fist on the banking system and make people take away cash like one of the professors at harvard wrote a book to get rid of all cash make people put their money into the bank this is this is a very dangerous thing that's why people are migrating to other platforms so we're at a point in time in history that could be very pivotal pivotal as to how we move forward with this but you know the media is controlled and if you look at regulation they
don't regulate companies like amazon that dips their fingers into everything and every different business or facebook or google they have become oligarchies oligarchies and basically these are they're controlling the content the everybody sees and this is where the regulatory agency should be looking not to control people's currency movements or whether they want to buy gold or invest a bit in bitcoin they should look at controlling the facebook's the googles and looking at news the news and it is because news in this country has become opinion and political advantage see and this is a way for the liberal left to read. history which is extremely dangerous if we look mark thompson who ran b.b.c. during the jimmy seville pedophile scandal snuck out of london and came to run the new york times and people have forget about history and where people are and how they move around but the same establishment figures are running things well one hundred sixty companies used to control the media now it's down to six in can one of the things i can cambridge one of the things i find appealing about bitcoin and
i'm i can't say that i'm an expert on it by a long shot it seems to promote entrepreneurial ship which i think is a really good thing again you know people that want to get out of the system away from the system the way from regulation is it fair to say that this is crypto currencies would be good for innovation. i think absolutely i don't think anyone doubts and i think actually you know it's is you know i think people can argue about how bad the regulation is but but in certain markets there's been a very pro cryptocurrency attitude because of the innovative aspects of it and people are taking a much lighter touch in switzerland in the u.k. even in elsewhere because of the amount of investment that's coming in because of the you know faster cheaper better ways we can do things with this technology and not just the technology itself but also the new funding channels that are opening up i mean the i.c.a.o. phenomenon which we have really talked about is on the one hand scary because there are some projects out there that you know clearly are fraudulent but out at the
same time you're also opening up access to early stage technology to seed stage technology to anyone around the world with an internet connection this used to be something you had to be a rich v.c. be able to do now if you have a computer have a little crypto currency you can invest in early stage technology that has a lot of risks and it also has a lot of opportunities it's personally for me i think an exciting part of the story in an image you know. ok ok jeffrey go ahead jump in just i'm glad you brought up this point about the i.c.a.o. because they've been kind of smeared in the financial press as being. that it's true there are some there's some rackets out there but the truth is that this is an amazing innovation yeah that allows people to raise any business to raise raise money from anybody without using any financial intermediaries that mean that they're the amount of innovation that capital that's going to unleash on the planet earth is beyond belief i mean it's inconceivable what the i.c.l.
market could do to transform the nature of capital markets themselves over the next ten years mitch go ahead jump in. yeah the is the issue the issue with the i.c.a.o. market as i see it it's an exciting market but it's the wild wild west in early days and what's going to happen is that the the propaganda bullhorns of the media and advocates for the j.p. morgans and the goldmans who are being infringed upon when these offerings come out and they're not going to get their fees so what will happen is they'll make an example out of one that fails like the media does the law have you know blow it up into a epic proportion this is bad you're going to get ripped off don't do this give us your money only invest through something that we vet for you so there will be winners and losers and you have to keep the perspective like i said at the beginning there's perspective and risk and reward and don't you know don't go out mortgage your house and put everything in into bitcoin or i.c.a.o. but look you look at this is as a portion of your portfolio and have
a diversification in your portfolio and when you when you go into a high risk thing like an i.c.a.o. do your due diligence do your own homework and like i say in my book don't ever invest in anything that you don't fully understand if you don't fully understand it and you invest in it then you deserve to lose what you lose but you know if you give it your best don't put all your money into it don't put all your eggs in one basket diversify put a little bit into it and if you take a loss on that and you make a profit somewhere else then you can balance out but your payout with some of these is going to be exponential as we we've witnessed before the problem comes in when you try to harness the volatility ok gary as we go back to you came in to give you the last word here what does bitcoin and similar currencies what do they have to do to create confidence in people that just see it is too risky what may be one or two steps they need to install. well i think you know similar to the mid to late ninety's during the dot com. we're in the infrastructure building phase for crypto currency crypto assets i mean yesterday we had three major exchanges experienced
significant problems two of those exchanges are going to be relied upon by c.m.e. for their futures market that simply can't happen you know on a regular basis like it does for this market to be taken seriously by institutions to be trusted by a broader class of individuals so more capital markets infrastructure is needed the right balance of regulation is needed and i think people absolutely need to understand that this is still very early stage very volatile i agree with you know the comments that have made about only put into this what you can afford to lose because it is still very high risk ok well it's been an interesting ride i'm sure we're going to see a lot more ahead that's all the all the time we have gentlemen many thanks to my guests a new york atlanta and in cambridge and thanks to our viewers for watching us here at r.t. see you next time and remember. hey
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clone of welcome to worlds apart russia and the united states have long had different takes on power and its constraints but those now find themselves at an interesting juncture while russia's development is slowed by too much power invested in the executive the united states seems const trunk for the exact opposite phrase and tells you all how many checks does it take to undermine the governing balance well to discuss that i'm now joined by a diesel a bestselling author and management consultant dr i.d.s. is great to talk to you thank you very much for your time thank you welcome now a few years ago one russian bank invited you to speak on what's more important
leadership or institutions and that seemed like a stupid question to a westerner but of course you need both but i think in russia where political. historically tended to supplant institutions that was actually a very pressing issue i guess i would try to rephrase it into how much or perhaps colleyville leadership does it take to build proper genuine institutions in a country that the problem here really is not either or. we need leadership and we need a situation of the question is what kind of leadership and look to the situation how do we work together. the usual problem is where you have a very strong leadership if forced into what's called the trap in other words when the leadership is doing a problem or making a mistake there is no countervailing power to control the mistakes not to be done in america this the two shows are relatively strong that they can control what the
president is making in the caesars who they're going to be very disastrous when you have the situations weak and this leadership is strong majorly stiff in being made and there is no controlling controls absolutely and the russian state is quite used to having expansive powers but on the other hand you increase in really here it complaining about paternalism add a lack of initiative from the people and that's ultimately i think is a question of management how do you manage to without being overbearing how do you exercise control without subduing do you have an answer to that. interviewed by. on the same subject and repetitively saying that the russian leadership is in a trap what is a threat russian culture is used to having strong leaders or to critically that if their leader is not very strong and very able to critique then they discard them
then look at them as if they are not good enough no one one hand. the russian are saying we need more democracy we need more openness we need more ability to participate but on the other hand the discouraging that because you believe that is open participative that discovered him so the us can forward through the. asking for is what the rejecting the most i believe that the russian leadership thought it was putting going all the way down they can not change their style if they wanted to change the style or they will be pushed aside and these are regarded i know that you are also and used to matter for all snare each in your speeches but i think in the russian context again a highly perturbed at least the context the parenting matter for is actually more political you don't want your children to endanger themselves but if you don't lad .